AN office building on Cork City’s South Mall with further rental uplift scope has sold within months of going to the open market, and has fetched about 25% over its guide price, after competitive bidding.
Confirmed as sold this week is 26/27 South Mall, a purpose-built 1970s seven storey building of 16,600 sq ft, with three floors vacant.
It has a current rent roll of €103,000, from tenants that include Focus Ireland on the ground floor, O’Mahony Pike Architects, the HSE and O’Connor Murphy Clune solicitors: the latter two tenancies are due to expire this year.
When launched in January with agents Lisney, it carried a €1.75m guide and Lisney director Margaret Kelleher and David McCarthy described ”significant interest from both Irish and overseas investment purchasers. In the final stages of the sale there were four bidders with a private, London-based investor with Dublin roots emerging as the eventual purchaser. The buyer was represented by Dublin agents Murphy Mulhall.
Lisney did not confirm the eventual sale price, but it’s understood to have been close to €2.2m. The property was part of the Friends First Irish Commercial Property Fund, with assets in excess of €500m under management.
Rents ranged from €20,000 to just over €30,000, with floors ranging from 2,200 sq ft to 2,600 sq ft, indicating a price per square foot of between €8-12psf.
Lisneys say levels of stock of this vintage in Cork now typically range from €10-15 psf, while new office are coming on stream at €25-30psf, with some deals tipping over the €30 psf level, such as those being secured at the new JCD 45,000 sq ft building at 85 South Mall, under advancing construction, while Dublin prime rents are up to €60psf.
The good existing rental income of €103,000, with the longer term asset enhancement possibilities, “ensured that the investment at 26/27 was well received in the market,” said David McCarthy.
He indicated the new owner “plans to undertake a significant refurb prior to letting. Estimated rental value for each floor after refurb will be in the region of €22psf,” which is below he headline €32 psf being sought for space in the new city centre office schemes.
Based on the current income, there’s a return of 4.5%, but there’s scope to double that and for the building once refurbed to earn close to €250,000 per annum.
Nearby occupiers include Bank of Ireland regional HQ at 32 South Mall, AIB’s HQ across the street at 66 South Mall, and a recent Lisney research document showed a headline vacancy rate in Cork of 14%, with significant differences between locations, but also showed overall vacancy rate falling by 10 percentage points since its highest level at the start of 2012.
DETAILS: Lisney 021-4275079
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